F and W
[2000] FMCAfam 44
•3 October 2000
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| F & W | [2000] FMCA fam 44 |
| SPOUSAL MAINTENANCE – Section 79 FLA & section 72 FLA |
| Applicant: | K A F |
| Respondent: | J M W |
| File No: | CA 662 of 2000 |
| Delivered on: | 3 October 2000 |
| Delivered at: | Canberra |
| Hearing Date: | 28, 29 August & 14 September 2000 |
| Judgment of: | Brewster FM |
REPRESENTATION
| Counsel for the Applicant: | Ms Godtschalk |
| Counsel for the Respondent: | Mr Brzostowski |
ORDERS
That the husband pay to the wife maintenance in the sum of $1,300.00 per annum during the period 30 March 2000 to 30 March 2003.
That within 60 days the husband pay to her the sum of $1,300.00 to cover the period 30 March 2000 to 30 March 2001.
That the remaining payments of $1,300.00 be made on 30 March 2001 and 30 March 2002.
It is directed
That all material produce sub poena which did not become the subject of exhibits will be returned by the Court to the persons producing it as soon as practicable.
That any material produced sub poena which became an exhibit will be returned by the Court at the expiration of the appeal period to the person producing it. Any material produced by a party which became the subject of an exhibit will be returned by the Court to the party at the expiration of the appeal period.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CA 662 of 2000
| K A F |
Applicant
And
| J M W |
Respondent
REASONS FOR JUDGMENT
This matter concerns an amended application by the wife filed 8 June 2000 in which she sought an order that the husband pay maintenance to her of $326.00 per week for a period of 3 years. In her case outline it was described as an application “for spouse maintenance, fundamentally seeking contribution from the husband to periodic payments the wife has to meet for the debts of the parties that the wife had incurred for the benefit of the parties.”
Background
The parties met and commenced living together in Korea in 1993. The husband was in the United States Army and the wife was studying the Korean language. The wife had been undertaking an Arts/Law degree at M University and after completing 2 years of that degree had taken up a position as an exchange student in Korea. Her Arts degree was in anthropology.
In December 1993 the husband was posted back to the United States. The wife accompanied him. In 1994 she completed her Arts degree at the University of Illinois. She subsequently completed a Masters degree in 1997.
The parties married on 28 December 1994.
Whilst she was a student in the United States the wife took out a number of student loans. There is a dispute between the parties as to the purposes to which those loans were applied. In my opinion it is not necessary to make findings with respect to this. I will return to these loans later in this judgment.
The wife also obtained monies from her parents from time to time. I will return to these later in this judgment.
In 1996 the parties filed for bankruptcy. The wife alleges that this was because of the husband’s financial irresponsibility. In my opinion it is not necessary to make any finding in this respect. What is of significance is that the student loans were unaffected by these events.
In 1996 the husband left the United States Army and in 1997 both the parties moved to Australia.
In December 1997 the parties separated.
In 1998 and 1999 the wife worked in a number of jobs in Melbourne. In 1999 she commenced full time study in Canberra with a view to obtaining a PhD. She receives monies from a scholarship awarded for this purpose. She has recently gone to Korea where she will remain for 12 months. If all goes well she should complete her course in 3 years.
The husband has been in employment whilst living in Australia. He currently lives and works in Sydney.
The student loans
These loans are divided into 2 categories. One of these categories is referred to as “Stafford” and the other as “non Stafford.” Repayment of Stafford loans can be deferred whilst the borrower is a full time student. During any period of deferment they do not attract interest. Non Stafford loans can also be deferred whilst the borrower is a full time student but they do attract interest at all times.
There are 2 lenders involved, Citibank and S M. Details of the loans are as follows:
a)There are 3 Citibank loans called loan 20, 21 and 22. Loan 20 is a Stafford loan and the balance as at 20 June 2000 was $US8,276.00. Loan 21 is non Stafford and the balance as at the same date was $US4,912.00. Loan 22 is also non Stafford and the balance as at the same date was $US3,190.00;
b)There are 2 S M loans. The largest of these is Stafford and the balance as at 12 June 2000 was $US8,500.00. The other is non Stafford and the balance at the same date was $US486.00.
The requirement to repay these loans has been deferred whilst the wife remains a student. The wife’s case is that notwithstanding this she wishes to repay all of the loans within 3 years. A schedule has been prepared on her behalf showing that the repayments necessary to achieve this would total $US837.00 per month.
There is no evidence that the lenders will, when they require repayments to commence, insist that a 3 year schedule apply. Indeed annexures A, B and C to the wife’s first affidavit indicates some flexibility in this respect.
The advances by the wife’s parents
These total $A10,540.00. Again the wife proposes that they be repaid over 3 years by monthly instalments.
Discussion
Section 79 of the Family Law Act gives the court power to alter interests of the parties between themselves in any property owned by either of them. However (except as an incident of adjusting interests in property) the Act does not give the court power to alter the interests of, or more accurately the liability of, the parties in debts owed by either of them.
It is for this reason that the wife has brought her case under the provisions of the Act that provide for spousal maintenance. This needs to be kept in mind in this case as much of the evidence adduced first by the wife, and then in response by the husband, was more relevant to property proceedings than maintenance proceedings.
Section 72 of the Act provides as follows:
A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonable able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
a)By reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
b)By reason of age of physical or mental incapacity for appropriate gainful employment; or
c)For any other adequate reason.
having regard to any relevant matter referred to in sub-section 75(2).
The wife’s case is based upon her liability to repay her student loans and the advances from her parents. It is not part of her case that if this liability did not exist she would be entitled to maintenance by reason of inability to maintain herself. This is apparent from paragraph 33 of her first affidavit in which she states that, if she is successful in her application, she would apply the whole of the maintenance to be paid to her to repaying her debts.
The husband’s first response to the wife’s claim is that she is capable of supporting herself even if the loan repayments were included in her necessary commitments. He says that undertaking PhD studies is optional and that there are avenues of employment open to her that do not require a PhD. However I believe that in the circumstances this contention should be rejected. There is evidence that, had the marriage and the move to the United States not occurred, wife would have been able to complete a law degree but that with the qualifications she now has an academic career is her best option. The evidence is that to pursue such a career a PhD is a virtual necessity. In all the circumstances I would rely on Section 75(2)(o) and hold that, if undertaking her PhD studies means that she is unable to support herself, she would fall within the provisions of Section 72.
The real question in this case is whether the wife is unable to support herself adequately.
Insofar as the parents’ advances are concerned I am unable on the evidence to conclude that they were advanced as loans as opposed to gifts. No evidence is given as to the discussions that may have taken place between the wife and her parents as to repayment and no documentation has been provided to support the contention of the wife that they were loans. The onus of satisfying me that the advances were by way of loans rather than gifts is on the wife: Heydon v Perpetual Executors Trustees and Agency Co (WA) Ltd 45 CLR 111, Joaquin v Hall [1976] VLR 788. I am not so satisfied.
Even if I were satisfied the advances were loans there is no evidence that the wife’s parents require repayment at any particular time.
The wife’s case in relation to the student loans can be summarised as follows:
a)Given that the loans have now been outstanding for some years it is reasonable to commence a repayment regimen now;
b)A 3 year repayment period is reasonable; and
c)She does not have the capacity to contribute to the repayments.
In addition reliance is placed on the case of Vautin (1980) FLC 92-827 as being authority for the proposition that an award of maintenance can be made to improve a party’s capital position. In that case an award of lump sum maintenance to cover replacement of chattels and future vicissitudes of life was made. However I do not regard that case, which involved lump sum as opposed to periodic maintenance and was described by the majority as “exceptional,” as being authority for any general proposition extending beyond its particular facts.
The difficulty with the propositions set out in paragraph 25 is that whilst the wife may wish to repay the loans as quickly as possible there is no legal requirement that she do so. She seeks to have them repaid over the next 3 years but this is the period in which she does not have to repay them. When the liability to make repayments commences she may or may not have the capacity to meet those repayments. If she does not then she would be unable to support herself and may be entitled to maintenance from the husband.
I do not mean to convey the impression that maintenance cannot be ordered if the applicant is able to meet those payments which are necessary and cannot extend to cover payment for things that are optional. I appreciate that a person may not be able to support himself or herself adequately even though the person may have the capacity to pay for the essentials of life. An example would be where the parties enjoyed a high standard of living throughout the marriage and the other spouse continues to enjoy such a standard. In such a case a maintenance order might be made which would cover optional or non essential things such as expensive holidays. But in such a case the award would serve to increase the standard of living of the recipient during the period maintenance was to be paid. In the present case however an award of maintenance to enable the wife to repay her loans would not provide her with a better standard of living whilst that maintenance was being paid. Rather it would enable her to improve her capital position and to enjoy a higher standard of living in the future.
However notwithstanding that the wife does not have to commence repaying the loans at present those of them that are non Stafford will attract interest in the meantime. I regard the payment of interest on those loans so as to prevent her getting further into debt as being a reasonably necessary expense. She does not have the capacity to meet this expense.
The non Stafford loans total $US8,588.00. The interest rate is currently 8.25%. This equates to $US708.00 per annum.
The husband has an admitted capacity to pay maintenance to the wife. He has conceded a capacity of at least $200.00 per week. I propose to order that he pay maintenance sufficient to meet the interest payable on those loans.
$US708.00 equates to approximately $A1,300.00. I propose to backdate the husband’s liability to 30 March 2000, the date the wife filed her first application for maintenance. I propose to order that it extend until 30 March 2003. By then the wife should have completed her PhD and, one would hope, have obtained employment.
Orders
The Orders I make are:
(1)
That the husband pay to the wife maintenance in the sum of $1,300.00 per annum during the period 30 March 2000 to
30 March 2003.
(2)That within 60 days the husband pay to her the sum of $1,300.00 to cover the period 30 March 2000 to 30 March 2001.
(3)That the remaining payments of $1,300.00 be made on 30 March 2001 and 30 March 2002.
It is directed
(4)That all material produce sub poena which did not become the subject of exhibits will be returned by the Court to the persons producing it as soon as practicable.
(5)That any material produced sub poena which became an exhibit will be returned by the Court at the expiration of the appeal period to the person producing it. Any material produced by a party which became the subject of an exhibit will be returned by the Court to the party at the expiration of the appeal period.
I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of Brewster FM
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